Best UK-Based Mutual Funds to Invest

As we head into 2026, UK investors face a familiar balancing act: capturing equity upside while keeping portfolios resilient against shifts in interest rates, inflation, and sector rotations.

A well-chosen set of UK-based mutual funds (OEICs/unit trusts) can help you build a diversified core, generate dependable income, and align with sustainability goals—without sacrificing long‑term return potential. Below, we break down key categories and name representative funds with recent track records, analyst recognition, or thematic relevance.

Why Mutual Funds—And Why Now?

Mutual funds provide professional stock selection, risk management, and instant diversification across dozens of holdings. In the UK context, the Investment Association sectors (UK All Companies, UK Equity Income, UK Smaller Companies, and various fixed‑income categories) offer clear ways to assemble equity and bond exposure. Rebalancing into bonds after strong equity years can help lower volatility and restore your strategic asset mix; Morningstar’s portfolio strategists stress rebalancing as investors approach spending years or pension drawdown, with intermediate core and core‑plus bond funds offering broad, investment‑grade diversification without excessive duration or credit risk. [source]

At the same time, UK equity markets have pockets of both momentum and deep value. Recent Trustnet analysis highlights under‑the‑radar top‑quartile performers across UK sectors, including growth and value mandates that have outpaced the FTSE All‑Share over multi‑year windows. For income seekers, only a minority of UK Equity Income funds have managed to grow the capital pot while paying above‑average dividends—so manager selection matters.

1. UK Equity Growth Funds

These funds aim for capital appreciation by investing in high-growth UK companies.

• JPM UK Equity Growth Fund
  Why it stands out: Multi-cap strategy targeting innovative British firms. Delivered 52.5% total return over three years, outperforming peers by ~17%.
  Ideal for: Investors seeking aggressive growth.

• Redwheel UK Value Fund
  Why it stands out: Focus on undervalued UK stocks with strong fundamentals. Achieved 50.7% return over three years.
  Ideal for: Value investors looking for long-term upside.

2. UK Equity Income Funds

Perfect for those who want steady dividends plus capital growth.

• BNY Mellon UK Income
  Performance: £10,000 invested five years ago grew to £13,387 (including dividends), paying £2,253 in income.
  Ideal for: Income-focused investors who also want growth.

• Man Income Fund
  Why it stands out: Consistently delivers above-average income and capital appreciation.
  Ideal for: Balanced income seekers.
  
  

3. Diversification with Bond Funds

After equity rallies, portfolios often drift overweight stocks. If 2024–2025 left you equity‑heavy, adding intermediate core or core‑plus bond funds can restore balance. Morningstar’s 2025 guidance highlights these categories for their broad investment‑grade exposure (government, corporate, securitized), controlled duration (typically 75–125% of the Morningstar US Core Bond Index’s ~3‑year duration), and prudent latitude for noncore sleeves in core‑plus (e.g., high‑yield or EM debt) without courting outsized risk. Look for funds with Gold Medallist Ratings (analyst‑driven) as of late 2025 to ensure process quality and fee discipline.

4. Ethical & ESG-Focused Funds

Sustainable investing is gaining momentum, and these funds combine impact with performance.

• Schroder Global Sustainable Value Equity; Royal London Global Sustainable Equity; Janus Henderson Global Sustainable Equity
  An independent UK guide highlights these global sustainable strategies with OCFs in the ~0.72–0.85% range and robust five‑year performance figures (Schroder’s cited ~101%), making them credible core candidates for an ESG sleeve. As always, confirm current factsheets for latest metrics, but the takeaway is clear: you don’t necessarily trade off returns to invest responsibly.
  
  
• Guinness Sustainable Energy Fund
  Why they stand out: Competitive costs (OCF ~0.72–0.85%) and strong 5-year returns (up to +101%).
  Ideal for: Investors prioritizing environmental and social responsibility.

Sources

Data compiled from mutual funds websites and correct as of 10/12/2025.

Important information: This article is for educational purposes only and does not constitute investment advice. Investing involves risk; you could lose money. If unsure, consult a qualified financial adviser. I may have generated the article or parts of the article  using AI model.